Week ending 18th April 2025.

It was a shortened trading week in the West, with markets in the US, UK, and Europe closed for Good Friday, and UK and European bourses staying shut through Easter Monday.

The week saw mixed performances across regions. UK and European equities ended the week higher, while US markets slipped. The Nasdaq and S&P 500 fell, dragged down by tech stocks after chipmakers declined on news of fresh US restrictions on semiconductor exports to China. AI-linked firms like NVIDIA and AMD were hit hardest.

Adding to the unease were comments from Federal Reserve Chair Jerome Powell. Speaking in Chicago, Powell offered a reminder that tariffs come at a cost—namely, higher inflation and slower growth. While he acknowledged the Fed is in no rush to make policy moves, markets interpreted his remarks as a sign that rate cuts may not be imminent after all.

Not all US data disappointed—March retail sales rose 1.4%, beating forecasts. Vehicle-related sales surged 5.3%, as buyers moved ahead of possible tariff hikes.

In contrast, European equities shrugged off global jitters. The STOXX Europe 600 rose nearly 4% over the week, with gains seen across major indices. Whilst in the UK, the FTSE 100 jumped 4.6%, its best weekly performance in months.

A mix of central bank dovishness and political pragmatism helped. The European Central Bank, as widely expected, trimmed interest rates by 25 basis points to 2.25%. But more significantly, it signalled it’s ready to go further. The ECB dropped earlier language about policy being “less restrictive” and instead adopted a data-driven, meeting-by-meeting stance.

Back at home, the UK delivered a rare upside surprise—by undershooting inflation expectations. Headline CPI came in at 2.6% for March, down from 2.8% and below the consensus forecast of 2.7%. According to the ONS, lower prices for recreational goods and motor fuel helped cool inflation, although clothing costs rose sharply, offsetting some of the decline. Services inflation, a key focus for the Bank of England, also cooled more than anticipated.

Wage data, meanwhile, showed earnings growth remains firm even as the jobs market softens. Average weekly earnings (excluding bonuses) rose 5.9% year-on-year in the three months to February. At the same time, March payroll data showed a decline of 78,000 jobs—the sharpest drop since 2020—raising questions about how long wage strength can persist.

Still to come this week we have Japanese and US PMI data and UK retail sales.

Nicola Tune, Portfolio Specialist

The ‘my wealth invest’ app will be available to clients who hold investments with my wealth, which is a trading name of Wealth at Work Limited, part of the Wealth at Work group.